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Brands in an Age of Anti-Americanism


Park Young Hoon of Seoul was quick to clench his fist and yell slogans against George W. Bush earlier this year in a giant rally denouncing the U.S. President's tough policy on North Korea. But that doesn't mean the 33-year-old computer engineer is willing to loosen his grip on his favorite American coffee or cola. "Calling for political independence from the U.S. is one thing, and liking American brands is another," he says. "Of course I like IBM (IBM), Dell (DELL) Microsoft (MSFT) Starbucks (SBUX) and Coke."

Luckily for the stewards of America's largest brands, plenty of other consumers around the world are making the same distinctions. America's go-it-alone attitude in recent years, which has shaped its position on everything from environmental issues to Iraq, has aroused plenty of anti-U.S. sentiment. So far, however, that antipathy is not spilling over into a widespread rejection of U.S. hamburgers or packaged goods. "Yemeni students were out burning the American flag, chanting 'kill the Americans"' in early March, notes Jack Valenti, CEO of the Motion Picture Association of America. "As soon as the theaters opened at 7 p.m., bingo, they were all in there." Indeed, overseas box-office receipts for American movies have been cresting at near-record highs this year despite mounting anger against the country in which the films were produced.

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Brand World

Interbrand CEO Chuck Brymer gives the rundown on the results of the 2003 top global brands ranking

Whatever the world thinks of the U.S. these days, American labels dominate this year's annual BusinessWeek/Interbrand Corp. ranking of the 100 most valuable global brands. U.S. brands claimed 62 places, including 8 of the top 10 spots. The ranking is based on a detailed analysis of how much of each product's sales are driven by the brand name, weighted for such other factors as market leadership, stability, and the ability to cross national borders.

Just because American brands dominate doesn't mean foreign brands aren't also moving up the ranks. Samsung Electronics, SAP (SAP), L'Or?al, and Toyota (TM) posted some of the biggest gains on the list. And consumers were clearly paying attention to current events. Another year of corporate scandals and mediocre stock market returns chipped away at the value of such brands as JPMorgan, Merrill Lynch (MER), and Morgan Stanley (MWD).

Those that have suffered the steepest valuation declines -- such as Ford, down 16%, to $17.1 billion, or Kodak, down 19%, to $7.8 billion -- are less the victims of a tense political climate than of stumbles under the weight of quality issues, mistargeted products, or other fundamental business problems. Some, such as Levi's and McDonald's (MCD) are racking up higher sales growth overseas than at home. The names that dominate the roster, such as top-ranked Coke and No. 2 Microsoft, are global players that rise above the noise of political dissent to appeal to consumers everywhere.

What is it, exactly, that's keeping U.S. brands aloft? Credit a combination of smart brand management and sheer luck. That American brands are born and nurtured in the world's largest and most eclectic economy confers a huge advantage. By the time they venture overseas, issues of quality, consistency, and logistics have largely been resolved. And many brands have been in the global marketplace for so long that few consumers can say with any certainty where they originated.

At the same time, American marketers have worked hard to imbue their products with American values that are still attractive overseas. "I think the core values of Levi's -- democracy, freedom, independence -- certainly are viewed as the best of America and its virtues," says Levi Strauss & Co. CEO Philip A. Marineau, whose brand still struggles at home but is coveted in markets such as Asia.

Far more important, marketers have learned to weave their products into the local culture by hiring local managers and adapting everything from packaging to serving sizes to flavors to the local market. Thus, McDonald's Corp. sells aloo tikka in Bombay, teriyaki burgers in Tokyo, the flatbread McArabia in Amman, and kosher McNuggets in Tel Aviv. Despite continued tensions in the Middle East, that's where the company saw some of its strongest sales growth over the past year. Many brands also try to cement their local ties by taking on ambitious community-service programs such as Coca-Cola (KO) Co.'s educational grants made through the Palestinian Authority and donations to environmental causes in Spain.

For a taste of how U.S. brands are sold, look at Pepsi in India. It's still the same soda pop that flows in America, but with a distinctly Indian twist. PepsiCo (PEP) has nurtured a homegrown image by sponsoring the hugely popular sport of cricket, using local celebrities in ads and filling its senior management slots with Indian talent. It has also taken community involvement to another level with such ventures as growing tomatoes and exporting chili paste with the state government of Punjab. Pepsi's local slogan, Yeh Dil Maange More! (This Heart Wants More!), is so popular that an Indian army major famously shouted it into the snowy Himalayan valleys after a key victory against the Pakistanis in the 1998 Kargil war. No wonder a three-day foreign-product boycott in the Communist state of Kerala barely made a dent in the soft drink's sales. And it's no surprise that the Pepsi brand has jumped 6% in value, to $11.8 billion, this year.

For other brands, however, victory overseas means adhering strictly to the formulas that propelled them to the top in the U.S. Take Dell Inc., which added 12% in brand value this year, to $10.4 billion. It has strived to replicate exactly the model that made it famous at home. That means mass customization, direct-to-the-buyer sales, and fast turnaround. The temptation to adapt to local conditions or lessen standards may be great, especially as European buyers have been slow to shop via the Internet and the less efficient payment practices of China mean buyers wait days before their Dell PC is shipped. But being a bulldog can pay off. Today, Dell is the largest foreign seller of PCs in China and is going strong in Europe.

Some brands have overcome an anti-American prejudice by appealing to shared values. Nike (NKE) Inc.'s "Just do it" message of individual empowerment and athletic achievement plays as well in Jakarta as it does in Jefferson City. The emotional appeal has proven especially powerful in regions such as Western Europe and Asia, where Nike is racking up the greatest sales growth.

Not every brand, of course, has found it easy to navigate overseas. Some misread demand; others get hung up on cultural differences. And a number simply become too stretched to maintain the quality and service that drove them to the top at home. Starbucks Corp. saw its brand gain 9% in value, to $2.1 billion, this year, but that was largely on the strength of double-digit gains in the U.S., where sales of everything from its compilation CDs to bottled Frappuccino are booming. "The equity of the brand has gone well beyond a cup of coffee," says Chairman Howard D. Schultz. Its 1,600 overseas stores are net money losers, however. Analysts attribute the losses to high startup costs, stiff competition, and less interest in the so-called Starbucks experience. Schultz blames the setbacks on temporary growth pains and a bad economy.

The problems have been far worse for U.S. carmakers. Not only are they losing traction in foreign markets but their home turf has long since been invaded by Asian and European competitors offering higher quality and better design, often at lower prices. Toyota gained 7% in brand value, surpassing its American rivals at $20.8 billion. Over the past 12 months, the Toyota brand has gained $1.3 billion in value, while Ford has lost $3.3 billion. The next big auto name on the list: Honda, which increased 4%, to $15.6 billion. The brands of General Motors (GM) and Chrysler, which are less global, can't even crack the top 100.

As the car rankings show, a brand's popularity is only partly a result of careful grooming. Quality can't be faked, and many shoppers outside the U.S. really only care about a good deal. "If something is useful we buy it, whether it's made in the U.S., China, or elsewhere," notes student Heather Kam, while sipping a Caff? Mocha in a Hong Kong Starbucks.

There's another reason consumers overseas can rage against U.S. foreign policy one minute and relax with a Bud the next. Some products have become so widespread that many people are only vaguely aware of their countries of origin. Ahmad Tarouat, a 23-year-old Parisian salesman, may insist that he will never ingest a Big Mac because "McDonald's stands for American imperialism," but he seems oblivious to the origin of the Nike sneakers on his feet or the pack of Marlboro Lights in his hands.

He's not alone. In surveys, consumers routinely guess that Heineken (HINKY) is German (it's really Dutch) and that Nokia (NOK) is Japanese (it's Finnish). Nestl? (NSRGY) a Swiss brand, found itself on some Arab boycott lists of American products during the Iraq war. And few know that H?agen-Dazs (GIS) and Est?e Lauder were actually born in the USA. Even where consumers can correctly identify the national origin of a multinational brand, they are more inclined to think of it as global rather than American or Japanese, according to research by RoperASW (UNEWY)

U.S. corporations know that it takes more than translated slogans to win over a local population. As Jeffrey R. Immelt, chairman and CEO of General Electric (GE) Co., has noted: "We are a global company, [so] we want to present a global face to our customers." For Immelt, that has meant pushing more diversity through the ranks and, where possible, putting foreign talent into key management slots -- and not just in their home countries. GE has watched its brand value increase 2% this year, to $42.3 billion, despite a tough economy.

Another area is getting increasing attention from American brand owners: the need to be perceived as responsible global citizens. That can mean everything from giving funding to rural schools, as Coca-Cola has done, to plowing resources into fixing environmental problems. True, established companies have long done that at home. But many are infamous for bad behavior abroad, from substandard conditions in factories to landscapes denuded by manufacturing.

In a global village, that kind of bad publicity anywhere can erode the value of a brand. Sexist ads in China can be transmitted to the West with a mouse-click. A grassroots complaint can garner a global audience if it's directed at a big name. That means, for example, that Nike's labor practices in developing countries can become an issue for consumers around the world.

The world is a fast-changing and fickle place where big names can quickly and sometimes irrevocably slide in favor. New competitors or louder anti-Americanism may yet send the value of American brands plunging. But so far they are still finding ways to connect with consumers everywhere. In the end, the most effective tactics are surprisingly simple. Take a look at one of Coke's hit commercials this year, which centers around a guitarist on a subway playing a melancholy tune until a kid hands him a Coke. After a long slug, he launches into a remixed version of the old mambo tune Chihuahua and soon has everyone on the subway chanting "Chihuahua!" Sure, it was made in Spain. But when Coke aired it in other parts of Europe, it found commuters there were chanting in unison, too. By Gerry Khermouch and Diane Brady in New York, with Stanley Holmes in Seattle, Moon Ihlwan in Seoul, Manjeet Kripalani in Bombay, Jennifer Picard in Paris, and bureau reports


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